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Issue #1637      May 7, 2014

National Commission of Audit

Corporate hostile take-over

The report of the National Commission of Audit was released last week in the lead-up to next week’s federal budget. The title of the report, “Towards Responsible Government” is a lie as are the foundations of the report. A more apt title would be “Towards Corporate Takeover” or “Towards Corporate Government”. There is nothing responsible about destroying the social foundations of a society, or throwing the most disadvantaged to the wolves and abandoning almost all responsibility for the well-being of the people of Australia.

May Day 2014 – Sydney. (Photo: Tom Pearson)

The report is based on the neo-liberal agenda, as dictated by global capital, for privatisation of government, deregulation, competition policy, dismantling the social security system and a takeover of the state by big business. The model is similar to the British conservative government’s Big Society. (See Guardian, “Abbott’s ‘Big Society’ – democracy under attack”, #1615, 23-10-2013)

The report takes up where the Howard government left off. Its main aims are to carry out a massive redistribution of wealth; to slash the living standards of working Australians; bring about a radical change in the role of government; provide the private sector with new sources of profit-generation; and enhance the powers and domination of big business over government and all aspects of life.

In addition to gutting the public service, the process includes privatisation of remaining public assets, user pays for everything, deregulation on a grand scale, opening up to “competition” and self-provision for all needs.

Treasurer Joe Hockey says, “The age of entitlement is over”. By entitlement he means anything provided to the people by government and collectively funded through general revenue.

Predetermined outcome

The membership of the Commission and its terms of reference predetermined the political and economic line of the audit.

The Commission was headed by the then big Business Council of Australia (BCA) president Tony Shepherd. The BCA’s chief economist and director of policy Peter Crone led the Secretariat. Shepherd, at the time of appointment, was also president of Transfield Services and Crone is a former adviser to the Howard and Victorian Kennett governments. (See Guardian, “Abbott’s audit: By big business, For big business”, #1616, 30-10-2013)

The terms of reference call upon the Commission “to make recommendations to achieve savings sufficient to deliver a surplus of 1 percent of GDP prior to 2023-24.”

The government deliberately restricts the Audit’s scope to government spending, to making “savings”. The terms of reference exclude the review of government income. This effectively leaves one option for balancing the books and producing a surplus – cuts to spending.

The report claims that its proposals would result in annual savings of $60-70 billion a year within ten years. That would not be an exaggeration! The cuts are relatively small over the next two (pre-election) years but then take off after that with vengeance.

Whitewash and spin

“In recent years, Commonwealth spending has outpaced revenue collections ... This is the sixth consecutive budget deficit. We have spent beyond our means for too long,” the report says.

The Commission makes wild, simplistic and unsubstantiated claims about the unsustainability of present spending. Its alarmist portrayal of government spending is unfounded. It is nothing more than a smokescreen – a manufactured crisis – to justify sending in the undertakers.

Anyone seriously reviewing a budget would look at spending and income, not just spending, and examine the benefits of each item and other factors such as capacity to repay or raise additional income. The Commission does not do this. That is not the real agenda. It is about cuts and the role of government.

In a speech last week in Melbourne, Hockey spoke of “redefining the role of government in society” and “the long term sustainability of the system”. At the same time in Sydney Prime Minister Tony Abbott was speaking about a “change in how Federation works”.

However, the word “cut” is not used once in reference to the jobs and services that are to be axed or the pensions and other incomes that are to be reduced. Instead, cuts are deceptively referred to as “savings”, “improving sustainability”, “containing future growth”, “improving access to equity”, “improve targeting to those in need”, a “set funding envelope”, and so on. The language, however, will not soften the heavy blows that it attempts to cover up.

In for the kill

The insurance companies and big banks stand to make a killing from the privatisations and the private health insurance companies as millions of Australians are forced to take out private cover for medical services.

Small pharmacies will go by the wayside as the two big retailers are allowed in, just one of a number of consequences of deregulation and opening up to competition.

The likes of Serco and Transfield are set to reap a windfall from outsourcing of government functions, including payment of pensions, unemployment and other benefits and private management of centralisation of government data.

99 percent hit

The report sets the agenda for a massive assault on living standards.

While it is an abundance of riches for the one percent, the 99 percent will be hit from all directions. Workers, the unemployed, students, age pensioners, aged care, the sick, people with disabilities, single parents, families, small business, small farmers, flood and fire victims, etc … are on the receiving end of the cuts.

The recommendations are skewed, so that the more disadvantaged a person is the larger the hit. Not only will wages, pensions, grants and other entitlements be cut but user pays will kick in. The Commission went beyond its brief to propose cuts to the minimum wage.

The cost of living will rise with co-payments for Medicare (what remains of it), higher charges for medications, user pays for roads, higher uni fees, etc.

Apart from the incredible hardship that will be inflicted, the impact on the economy will be contractionary. The cost of living will go through the roof with deregulation, privatisation and users pays at the same time as incomes of millions of Australians are reduced, including those of thousands of sacked public servants. This will result in more bankruptcies and sackings.

Environmental programs are amongst those for the chop and the impact will be compounded by deregulation of mining companies’ and developers’ activities.

Redefining the role of government

The report’s estimate of 15,000 public service jobs going appears to be on the conservative side. Sixty-five percent of government agencies and bodies are set for abolition, merger, rationalisation or consolidation. Most government advisory councils will be abolished.

The Departments of Education and Health, in particular, will be gutted as responsibility will be handed over to the states and in the case of Medicare much of it to the private health insurance industry.

The cuts are so savage that, if implemented, they will result in far more than a one percent surplus. The longer term aim is to wind back company and personal income taxes, especially on high incomes.

The areas that remain untouched or are seen as a responsibility of the federal government are the making of laws, law and order, security, border protection, asylum seekers, defence, ASIO and other intelligence outfits.

Federalism 1901

The report calls it “competitive federalism”. In reality it is a regressive proposal to break the nation up into competing “sovereign states” in a race to the bottom wooing global investors.

They will be able to compete by offering different income tax rates, lower minimum wage rates and other concessions in a completely unregulated environment.

Federal spending on health, education and other government responsibilities and services will be handed over to the states (or private sector), to do as little or as much as they like – as Queensland Premier Campbell Newman put it, “to sink or swim”. The carrot to the states is that a share of income tax that will be at their disposal without any strings attached. This is just a first step, with no guarantees that the states will have adequate income.

The question of the GST and taxation is the subject of another government review.

10-year blueprint

Sydney Morning Herald columnist, Ross Gittins, passes the report off, with references to previous Coalition governments and their audits. He claims it is only a tactic to blame a previous Labor government and so justify a horror budget. “Don’t worry”, he says, “Don’t believe it.”

The recommendations “go so far over the top”, says Gittins, “today is the last you will hear of most of its 86 recommendations.”

Gittins has got it horribly and dangerously wrong. The report is not a scare tactic, it is intended for implementation and as the word “towards” in its title suggests a stage in a long-term process of a hostile take-over by big business. It is a 10-year plan for big business, by big business.

The government has already indicated it accepts the majority of recommendations.

Abbott and Hockey will no doubt make good use of the report to soften up the public when next week’s budget is released and many of the report’s horrors do not appear. The major recommendations are scheduled to hit in three years time. They will no doubt make some minor changes such as to parental leave.

Labor leader Bill Shorten and shadow treasurer Chris Bowen have yet to seriously oppose the report’s contents. Instead they have focused on whether or not Abbott is breaking any election promises. Their failure to take a strong stand, or even a stand, against the key elements of the report or government’s agenda adds to the perception created by Gittins that there will be a few nasties but “don’t worry.”

The extent to which this agenda can be implemented will depend very much on the strength of the movement outside of Parliament to defeat it and the role of the independents and Palmer’s United Party in the Senate. The outcome of the federal elections in 2016 (or possibly earlier) will also be critical. The other element that could impede its implementation is failure to gain consensus amongst the states. The minority Labor government in South Australia could prove critical, it should be a major target of public pressure.

The Australian Greens are the only parliamentary party to take a strong stand. Greens leader Christine Milne said the report should be “a call to arms that we begin the process of kicking this mob out.”

It should also be a call to arms to begin building the broadest movement possible to not only defeat the Coalition but to elect a government which is prepared to govern in the interests of the people.

The claim that “we can no longer afford” to provide the social welfare programs and services as in the past in the midst of record levels of wealth is an indictment of the capitalist system. It is a timely reminder that capitalism is well past its use-by date and socialism is long overdue.

Next article – Editorial – Victory Day

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